Making Millions in the Trades, Dropping Point-of-Sale Systems, Leaving Remote Work Behind

Hey, everybody, it's Gene Marks and welcome to this week's episode of the Paychex THRIVE Week in Review podcast. This is where we take a few items in the news that impacts our businesses, and we talk a little bit about them and see how they do impact our business and maybe do a little navigating around what those issues are. So, let's go right to the news. 

My first story that I want to choose this week is a great one. It's from the Wall Street Journal. They reported that America's new millionaire class – can you guys guess? – plumbers and HVAC entrepreneurs, heating and air conditioning entrepreneurs. Let me read you why.

Private equity firms are snapping up plumbing and home contractors and service businesses and let me read you some of these. Private equity, no foreign player in the skilled trades these days, they're scooping up home services firms like HVAC, heating, ventilation and air conditioning, as well as plumbing and electrical companies. They hope to profit by running larger, more profitable operations.

According to the Wall Street Journal, the growth is it marking a major shift, taking home services firms away from family operators by offering mom-and-pop shops seven-figure and eight-figure paydays. It is a contrast from previous generations, when more owners handed companies down to their children or employees, and it's making a bunch of millionaires around this country is what it's doing. 

One example is a private equity firm has already acquired 35 companies in the past four years. They range from smaller outfits, which they buy outright for an average of about a million bucks, to more sizable companies, where they pay as much as $20 million for the firm. The trades, therefore, can continue on with their workers and offer, you know, good retirement and better benefits plans, and the owners get an exit. 

What interests me about this story is that, and I've reported this earlier on other editions of the Week in Review, is how it is becoming more and more of a trend for business owners to sell their businesses because business owners their demographics are just getting older.

Well, private equity firms are jumping in. And we all know that home services companies like electrical firms, HVAC firms, plumbing firms, these are mostly family-owned businesses. Well, the Wall Street Journal is right. Back in the day, they would sell it to other generations that would want to take it over, maybe to another local business. But demographics has changed. A lot of kids don't want to do that kind of stuff anymore, and maybe there's not enough local businesses to sell it to. So, these private equity firms are jumping in and rolling it up. 

The takeaway is this if you've got a home service firm or an HVAC firm, you're a plumber, you've got an electrical firm, whatever the case may be, and you might have five employees, you might have 500 employees, and you are getting to the stage where you like to plan your succession and exit out, consider – consider – private equity as a potential place to go to cash out of your business. 

The next story comes to the website Payments, that's PYMTS. A new survey just came out among merchants – and ready for this? Seventy-one percent – 71% – of merchants that they surveyed expect software to replace their point-of-sales terminals. 

Now, what do we mean by software and point of sales? Well, obviously, we go into retail stores or restaurants, or we're used to, you know, there's a cash register there, right? Or they hand us a device and we tap our credit card or whatnot. Well, the trend is changing, and the trend is changing because now there are more software applications that right on our smartphones can complete the transaction ourselves so that we don't have to be tapping or anything else. Consumers are just doing it on their own. 

So, beyond its appeal for micro-merchants, these software applications provide significant advantages for brick-and-mortar businesses. This is what PYMTS writes. “For instance, traditional point-of-sale systems often lead to long wait times during peak hours, which can frustrate customers and result in lost sales. By using a software system on your phone, staff can accept payments directly from customers anywhere in the store, enhancing the shopping experience and reducing bottlenecks. The flexibility improves customer satisfaction but also shows retailers to optimize staff deployment.” 

Now, by the way, this is software that's either on your phone that you're doing a self-checkout, or it could be on a staff's phone, as well, and they're doing it, but because staff are all over the store, it makes it easier than have to wait in line for a checkout.

Also in this survey, they point out some age-old problems that this thing, that this is really, you know, solving. For example, putting in a point-of-sale system in a retail store, it costs a lot of money. It can cost, you know, $10,000 to put in a system. You might be paying $3,000 to $10,000 a year in service and maintenance. And there's cloud, you know, software costs for an internal system where you don't really have to do that if it's just an app on either your employees’ phone or your own employees’ phone, right?

And the other thing that the PYMTS survey points out is that having software on your phone or your employees’ phone, I can keep up with the latest PYMTS developments. I mean, who knows how we're going to be making mobile payments, you know, years from now? Will it be crypto or will credit cards still be around? Will it be other types of payments? So, you know, when you have software on your phone, you can make those changes and adapt to it without having to get a whole bunch of new technology.

So very, very interesting – 71% of merchants expect themselves to be getting rid of their point-of-sale systems and moving more to software on the phone to be either their employees or their, you know, their customers themselves. 

The final story of this week comes from FORBES. A new survey: 70% of employers plan to crack down on remote work in 2025. This is not good news for employees who love their remote work. Obviously, this comes on the heels of Amazon forcing their employees to come back – mandating their employees to come back into the office. 

A new survey from – it's called Resume Template – reveals that, well, a lot more companies are feeling the same way. They interviewed or they surveyed 700 business leaders in October and uncovered that 3 in 4 of the companies that they worked with were experiencing difficulty enforcing their return-to-office policies because workers are refusing to comply.

So, what are employers doing about this? Well, they want employees to come back to the office. They need to track office attendance. They need to build stricter compliance. They need to ensure that workers who are spending more time in the office are put more forward for raises and promotions. 

Now, this does raise some issues. I mean, if you're going to give incentives, financial incentives to come back to the office, it's kind of discriminatory, isn't it because, you know, what happens for the people that were back in the office? They're not getting those financial incentives or haven't been for being in the office, and that kind of raises a bit of a problem. 

The second big problem is the issue of micromanagement. I mean, employees today, they want more independence and more autonomy, and, you know, to micromanage whether your employee is doing their work from their home or doing it from the office, is another whole thing.

But right now, according to this survey, a huge amount of employers are planning on bringing their employees back to the office like Amazon has mandated, and that seems to be a trend. 

My advice guys, listen, I mean, because I've seen it with so many of my clients; You know, my most successful clients have some type of a hybrid policy. They let their employees work from home a couple days a week – if they're able to and their jobs allow them to do that. And then you do, you know, you do want to have some office days in the week. 

And I still say, listen, if you were to say to your employees before COVID that they could have two days working from home a week, I think they would have been jumping for joy. Most employees, I think, get that. I think they're grateful to have a couple of days working from home, and I think as business owners we like to have all of your employees come into the office because, you know, it improves camaraderie and innovativeness. And, you know, socializing is good stuff. Mentoring is good stuff for our younger employees. 

There's a middle ground to reached. You don’t have to mandate five days in the office. My opinion, I think you can navigate around that by having more of a hybrid approach. That's what most of my clients are doing.

My name is Gene Marks. You've been watching or listening to the Paychex THRIVE Week in Review podcast. Hope you got some good information out of this. If you'd like more good information to help you run your business, then please visit us at paychex.com/thrive and you can sign up for our newsletter. You'll get lots of tips and advice to help you run your business that way. 

Thanks again for listening and watching. We'll see you again next week with some more items in the news that impact your business and some thoughts around those particular items. See you then.

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